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Tax Season Awareness

As we enter tax season it is good remind ourselves what we need to prepare.

A little prep goes a long way
  • Gather your records together:  By now you should have received most if not all of your tax forms in the mail.  Gather them all together along with any relevant receipts or other pertinent records you might need and viola!  Task one accomplished!
  • Decide how you will file:  There are plenty of free resources for filing your taxes and starting with IRS.gov is not a bad idea.  There are both free services for filing and help if you get stuck.
  • How will you receive your refund or pay your taxes:  Once you have filed your return, before you submit it, decide how you want your refund.  It is simple to link a bank account so that your refund is automatically deposited.  You can always receive a check in the mail but expect it to take longer.

If you prefer to have a paid preparer do your tax return for you, you will still need to do the above tasks.  If you have a trusty professional that prepares your return every year you are ahead of the game. If you need to find one be careful to check them out first.  There can be unscrupulous people out there.

Before and after you prepare your taxes be aware of scams.  Remember the IRS will never call you or ask for money or your social security number.  And as always, if it sounds too good to be true – yep, you’re correct, it probably is!

It’s Good to be Afraid of Tax ‘Ghosts’

The Internal Revenue Service is reminding taxpayers to avoid unethical “ghost” tax return preparers. What is a “ghost” preparer? Well, it may be more than you are aware.

Be wary of unscrupulous tax preparers

If your preparer fills out your return and then will not sign it they are a ghost preparer. Unscrupulous ghost preparers will print the return and tell the taxpayer to sign and mail it to the IRS. For e-filed returns, the ghost will prepare but refuse to digitally sign as the paid preparer.

By law, anyone who is paid to prepare or assists in preparing federal tax returns must have a valid Preparer Tax Identification Number, or PTIN. Paid preparers must sign and include their PTIN on the return. Not signing a return is a red flag that the paid preparer may be looking to make a fast buck by promising a big refund or charging fees based on the size of the refund.

Ghost tax return preparers may also:

  • Require payment in cash only and not provide a receipt.
  • Invent income to qualify their clients for tax credits.
  • Claim fake deductions to boost the size of the refund.
  • Direct refunds into their bank account, not the taxpayer’s account.

No matter who prepares the return, the IRS urges taxpayers to review it carefully and ask questions about anything not clear before signing. Taxpayers should verify both their routing and bank account number on the completed tax return for any direct deposit refund. And taxpayers should watch out for ghost preparers inserting their bank account information onto the returns.

Click here for tips on what to look for when choosing a tax preparer.

New Year. New Outlook.

New Year.  New outlook.  New organization…. Go!

OK, maybe we can’t help with all things on your New Year’s to do list but we can certainly help you get ready to prepare your taxes. 

Prepare your new year

If you are a business owner make sure you or your accounting department has taken care of all end of 2019 payroll, tax payments, contributions etc. Check here and here on our articles on year end tasks and make sure all the relevant boxes are ticked.  Even if you missed something don’t delay – especially when dealing with tax payments, the more time that passes the more penalties can accrue. 

Review your financial statements. 

A once over won’t do.  Take time to really review all of your income and expenses and think back over the year.  This is the time to find missing transactions if there are any, especially income as a business owner.  Filing revised taxes later is a hassle and extra expense.

Make sure your employees and independent contractors get their forms by January 31. 

Review your retirement contributions.  You may have some extra time to contribute to an IRA account.  Check with your tax preparer before you plan on filing.

Organize Your Documents

Whether you are filing an individual tax return, a business return, or both you need to have all your documents in order.  Gather together:

  • Income documents – W-2s, 1099s
  • Retirement account contributions
  • Educational expenses – Form 1098-T
  • Medical bills
  • Property taxes and mortgage interest
  • Charitable donations
  • Classroom expenses
  • State and local taxes.

For business make sure you have all of the following documents as well:

  • Income statement
  • Balance sheet
  • Bank and credit card statements
  • Payroll documents
  • Last year’s business tax return
  • Partnership agreements
  • Accounting documents
  • Asset purchase details
  • Depreciation schedules

Make your appointment with your tax preparer in advance of the deadline to file!  Nobody likes to be rushed, especially if you have to locate additional documentation.

File an Extension?

Of course, we should all file our taxes on time.  But the IRS understands that life happens and sometimes that is just not possible.  But you do need to get your extension request in on time!

Review and Revise

Start with the up side – what did you get right last year?  Maybe you had all your documents in one area of your office last year.  Yay!  But figuring out after the fact what that note meant and whether that $100 was income or an expense, uh not so much? 

Now is the time to think through how your information is best organized for your personal and business needs, and how best organized for tax filing.  They will not line up exactly but maybe you can find a compromise between. Maybe one folder for each month of receipts and documents, or alphabetical files for all receipts and documents.  Maybe you prefer to organize by type if you need to locate files in the middle of the year. 

How ever you decide to organize head in the direction of a little bit better than last year!

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